Mark my words: 2019 will be the year enterprise technology companies go back to kindergarten and realize that sharing really is caring—about their customers. Several key moves last year point toward a future full of collaboration between large and small technology vendors—even those that compete against one another.
Companies rarely use a single vendor for all their enterprise IT needs, and their shift toward increased agility and their need for specialized capabilities will only lead to greater fragmentation. The vendors that make it easiest for their customers to connect IT systems with one another will be the biggest winners in the current IT market, even if that means they must work with previously sworn enemies.
While integrating products with those of a competitor may seem like a risky move, the vendors that pull off those integrations have the ability to actually strengthen their defensibility through the application of network effects. Think of it this way: An ERP system becomes more valuable to the company that uses it with each successful connection the system makes to the company’s other systems of record. In turn, that makes it more difficult for the company to turn around and replace those systems.
Over the past five years, competing enterprise technology companies increasingly have partnered with one another to benefit their shared customers. Last year was a significant year for that sort of collaboration in the enterprise space.
Salesforce.com announced several key strategic partnerships last year, including work with AWS that will make it easier for customers to send data back and forth from Amazon’s cloud. Of particular interest is the work the two companies are doing on Amazon Connect, the Seattle-based company’s contact center software that competes with Salesforce’s own Lightning Dialer product. Google Cloud and Salesforce are also working together on IoT and analytics applications to serve their shared customers, even though Salesforce already offers its own analytics suite.
On the end user side, Google now allows Box users to store files from Google’s G Suite collaboration service in the content services company’s cloud, and is working with Dropbox to provide similar functionality. Box and Dropbox compete with Google Drive, but working with the other companies allows Google to broaden its appeal, especially to companies that would prefer their data not get stored on Google’s servers.
But there’s a new sort of collaboration on the horizon: Multi-company alliances that provide even broader benefits to customers. Microsoft, SAP and Adobe announced last fall that they’re working on a new project called the Open Data Initiative that’s supposed to bring customer data from the three companies’ disparate products together into a common data lake for processing and analysis. Under the new initiative, customers should be able to read and write data from all three companies’ business applications.
Microsoft CEO Satya Nadella said at the time that customer demand for collaboration and integration was the driving force behind this initiative. Pooling business application data is critical to enterprises’ futures. Companies that want to make the most of advanced analytics will need to access previously disparate data sources. Organizations must break down their internal silos between functions to increase enterprise agility—and technology must follow suit.
Why now? It’s easier for different vendors to integrate with one another when business applications reside in the cloud. Different companies can build APIs to facilitate connections with one another. Vendors can also ensure their customers are running on consistent managed environments, which simplifies connections between different vendors. Customers also can more easily change vendors in the cloud era, which puts increased pressure on tech companies to provide products that meet enterprise needs, which means they must integrate more broadly.
These companies also can build upon the foundation of their individual partnerships to form broader alliances. Both SAP and Adobe have individual strategic partnerships with Microsoft, and those relationships likely make it easier for them to forge a broader-reaching agreement.
Finally, if tech companies don’t partner with one another, other firms will come along to do the job. A fleet of businesses including Informatica, Sapho and Mulesoft (now a part of Salesforce) exist to help enterprises create and operationalize connections between data sources. If vendors choose not to build these integrations, customers will find a way to create critical connections and may even abandon siloed products for more open alternatives.
How Far Does This Go?
There are still some fairly clear (if unstated) boundaries that haven’t yet been crossed. For example, Salesforce’s partnership work with Microsoft could be best described as minimal, ever since Microsoft’s attempted acquisition of Salesforce fell through and Microsoft beat out Salesforce to acquire LinkedIn. Similarly, AWS and its hyperscale cloud competitors aren’t doing much in the way of strategic partnerships with one another, and are instead content to keep sniping at each other through public announcements and new product launches.
As such, enterprises should expect there will still be barriers to full and true openness among their technology vendors, and those barriers won’t be overcome easily. Case in point: For all of Microsoft’s talk of openness with the Open Data Initiative, the data lake in which customers are sharing their information with SAP, Adobe and Microsoft is hosted in Azure, not another cloud. If Azure remains the sole storage option for this initiative, it seems logical that not every Microsoft competitor will play ball and participate, since doing so would drive use of one cloud platform.
However, there are some glimmers of hope on the horizon for broader collaboration between major cloud players AWS, Microsoft, Google and IBM. All of them are now members of the Cloud Native Computing Foundation and are working on the Kubernetes open source container orchestration software. As Kubernetes forms the foundation for an increasing number of modern applications, it’s possible we’ll see major cloud providers opt to work more closely with one another on building foundational components of application infrastructure.
While such collaboration is far from friction-free, it does provide opportunity and a foundation for these firms and others to increase their collaboration, which we expect will be more important in the future as enterprises continue to embrace hybrid- and multi-cloud deployments.